Reagan Issues Trade Ultimatum

September 08, 1985|By George de Lama, Chicago Tribune.

WASHINGTON — President Reagan, seeking to head off protectionist legislation in Congress, warned Japan and Europe`s Common Market Saturday to remove trade barriers against American leather products and canned fruit by Dec. 1 or face retaliation against their exports to the United States.

In his weekly radio address, Reagan also said he has ordered an investigation into unfair trade practices by Japan, Brazil and South Korea, but he stopped far short of saying he would impose the strict tariffs or quotas that some lawmakers advocate.

``Our trading partners should not doubt our determination to see international trade conducted fairly with the same rules applicable to all,`` Reagan said from the presidential retreat at Camp David, Md.

Bowing to growing congressional pressure for action to relieve the nation`s swollen trade deficit, expected to reach $150 billion this year, Reagan said he opposes protectionist policies. But he warned that he would retaliate against foreign goods if U.S. exports are unfairly restricted.

``We hope that we will convince our trading partners to stop unfair trading practices and open those markets that are now closed to American exports,`` Reagan said. ``We will take countermeasures only as a last resort.``

Reagan did not specify what countermeasures he might adopt, but he has the authority to close U.S. markets to foreign goods or impose quotas or tariffs. The President said he has instructed Clayton Yeutter, the U.S. special trade representative, to draft a list of options.

Reagan said South Korea had blocked U.S. firms from selling fire insurance and life insurance, Japan had hindered the sale of U.S. tobacco and Brazil had blocked the sale of U.S. computers.

In addition, Reagan said he had imposed a Dec. 1 deadline for an investigation into Japanese restrictions on U.S. leather goods, including footwear, and into Common Market subsidies that restrict canned fruit from the U.S.

Congress is expected to act on the first of more than 200 protectionist trade bills later this month, setting the stage for a legislative showdown over the Reagan administration`s staunch free-trade stand.

Reagan`s action was the first time a president has acted on his own to use the broad powers of the 1974 Trade Act to order investigations into unfair trading practices overseas.

Investigations also can begin after complaints from industry, labor or the U.S. International Trade Commission, but by initiating the investigation himself Reagan can speed the process considerably, White House officials said. Yeutter called Reagan`s action ``a historical precedent,`` and he said it would ``send a very strong message to our trading partners around the world.`` In the Democratic response to Reagan`s speech, however, Rep. John Murtha

(D., Pa.) criticized the administration for failing to ``stand up`` for American workers by clamping down on imports and demanding greater access for U.S. products to foreign markets.